Business West, the lobbying and advice group that runs the Swindon & Wiltshire Initiative, welcomed yesterday’s fall in inflation but warned that the Government still needed to do more to support business as it emerges from recession.
Managing director Phil Smith said the drop in annual CPI (consumer price index) inflation from 1.7% in February to 1.6% in March contributed to an environment of stability and reduced the case for short-term interest rate rises.
But more encouragement for investment and exports was needed along with better access to finance for expanding businesses, he said.
It is the third consecutive month inflation has been below the Bank of England’s 2% target rate and the lowest rate since October 2009.
“We expect inflation to continue falling in the coming months before edging up gradually, but it is unlikely to exceed the 2% target,” he said.
“It is therefore the right approach from the Bank of England to maintain clarity over its forward guidance policy so that businesses can continue to plan ahead and invest.
“Economic growth should receive a further boost shortly when wages increase by more than inflation. But for a secure and lasting recovery, the government should continue to provide further measures in key areas such as improving access to finance for growing firms, and supporting our exports and investment.”
The Office for National Statistics (ONS) figures show the largest contribution to the fall in inflation came from motor fuels, followed by clothing and furniture and household goods.
These were partly offset by upward contributions from restaurants, hotels, alcohol and tobacco and goods price inflation in March 2014 was 1.0%, while services inflation was 2.3%.